The Current Market Sentiment: October 23, 2012

We have spent the first day of this week watching the Japanese yen losing strength across the broad while the selling pressure was accumulating on it following weak released trading data of Japan in September have displayed the biggest yearly drop of its exports since 2011 march earthquake by 10.3% to highlight the possibility of another closer action by BOJ to take another easing decision adding to its assets purchasing plan to spur investment offering and pushing for cheaper yen next week after it has kept its amount unchanged at 55tr yen at its last meeting flowing previous adding last month by 10 trillions yen under continued political pressure for moving it forward for fighting the persisting deflation pressure facing its economy with the global economic slowdown.

The greenback which could give the market good impression versus the Japanese since the release of September labor report which came as good for Dollar as good for risk by revising up August non-farm payroll figure strongly to 142k from 96k adding 114k in September closer to the consensus which was referring to 118k driving down the unemployment rate below 8% to 7.8% which is the lowest since Jan 2009 and now the greenback is getting closer to 80 psychological level versus Japanese yen with the market sentiment getting better at the end of the US session and during the Asian session pushed by optimism of having better GDP figure of the third quarter in US by the end of this week specially after the recent consuming data which came out from US to express about the chance of having higher consuming spending to push the economy up in the coming period too.

As we have seen recently US UN. Michigan consuming sentiment jumping over 80 in its preliminary reading of October to 83.1 from 78.3 in September after Sep retail sales of Sep came up monthly by 1.1% while the market was waiting for 0.8% and also after US consumers confidence index of September which had rose to 70.3 from 61.3 in August while the market was waiting for improving to 63.

From another side, the greenback has been underpinned by the data which have come out from the US housing market to show that the Fed may not be in need to offer it for long time by this current way for sustaining the economy and its struggling housing sector suggesting that there can be a rate hike possibility sooner than 2015 which has been mentioned in the recent Fed's assessment after its meeting last month when it has announced its monthly continuous purchasing of mortgage backed securities by $40b as we have seen US housing starts of September rising to 0.872m while the market was waiting for 0.77 from 0.758 in August and also US building permits which rose to 0.894m from 0.803 in August while the market was waiting for 0.810m suggesting that there was a cheeriness and also readiness in the housing market to this considered QE3 action which supports the demand in this market.

God willing, after USDJPY ability to get over its previous resistance at 79.63 this time, its next challenge can be with meeting 80 psychological level which its falling can be followed by other resisting levels at 80.61, 81.76, 83.37 before 84.16 while getting back down can be met with supporting level at 79.53, 78.98 and 78.26 which can be followed by 77.96 before another supporting level at 77.78 which its breaking can lead to 77.42 whereas it has formed its previous bottom to the current level after falling from 79.20.